Monday, January 19, 2004

In a previous post I discussed one of the books that has made the biggest impact on me in the last few years, Guns, Germs, and Steel: The Fates of Human Societies by Jarod Diamond (GGS). I recently bought a new edition of the book partly because it contained a new afterword called "2003 Afterword: Guns, Germs, and Steel Today".

In the afterword, Diamond notes the acceptance of his book and how its basic arguments have stood the test of time, although with additional detail added to be sure. He then discusses four areas that people have brought to his attention that parallel the themes of GGS in a specific area of study. The fourth area he discusses caught my attention since it dovetails nicely with another book that impacted me and that I had discussed in reference to California and Gov. Arnold, Fareed Zakaria's The Future of Freedom: Illiberal Democracy at Home and Abroad and is of current concern because of our nation building efforts in Afghanistan and Iraq.

Briefly, Diamond notes that economists are beginning to realize that the difference between rich and poor countries lies not only with the differences in their institutions but also in the origins of those institutions. Diamond says that

"it seems to me that, in the past, good institutions always arose because of a long chain of historical connections from ultimate causes rooted in geography to the proximate dependent variables of the institutions. We must understand that chain if we hope, now, to produce good institutions quickly in countries lacking them."

This reasoning echoes that of Zakaria who argues that one of the links in the chain to producing good institutions - those that promote stability, the rule of law, religous freedom, property rights, and ultimately liberty - are dependent on the development first of a capitalist system that requires the institutions and sets up a positive feedback loop for further strengthening both the economy and the institutions. He argues this point from economic studies that show that a country moving to democracy with a per capita income of over $6,000 in today's dollars will likely never revert to an autocratic form of government while those countries with incomes of under $1,500 last an average of only 8 years under democracy. He then surveys countries around the globe and notes the successes of this model including Mexico, Spain, Greece, Portugal, Taiwan, Chile, and South Korea, while looking forward to the democratization of China, which is fast progressing up the per capita income scale because of economic reforms carried out by its autocratic leaders. However, he excludes resource rich states like Saudia Arabia, Venezuela, and Egypt from this analysis because although they have a significant amount of wealth, he views them as "trust fund kids" in the sense that the government gets rich without the need to tax its citizens, and thereby provide services and institutions that promote stability.

If one goes back further than the recent past, Zakaria agrees with Diamond that the process that produced capitalism and liberal democracy in England and America was one with a long history rooted in geography and with a large role played by Christianity as a check on state power. However, now that the model has been established he seems to be saying that although you can't reproduce those contingent historical processes around the globe, you can attempt to produce the patterns, a burgeoning capitalist economy and the strengthening of institutions under what he calls a "liberal autocrat" - a ruler who can enact reforms to liberalize the economy while retaining control (e.g. Chile's Pinochet) - finally followed by a true liberal democracy. As a result, in Iraq he calls for at least 5 years of economic development and stabilization before democracy is instituted. Unfortunately, it appears that there is little patience on the part of the Iraqis for such a plan and the handover is set for June. I don't think Zakaria would be too suprised if the nascent democracy fails and becomes an illiberal democracy or slides back into a dictatorship as its people demand stability that the government cannot bring in short order.

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